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THE NEW INCUMBENTS Anti-trust in the digital economy
Camille Mendler
Principal Analyst
Informa Telecoms & Media
June 2012
www.informatandm.com The New Incumbents: June 2012 @cmendler © All rights reserved
2012: A year of anniversaries
200th AnniversaryBirth of
Charles Dickens
60th AnniversaryQueen Elizabeth II’s coronation
100th AnniversarySinking of the Titanic
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Here’s onethat’s been forgotten
30th AnniversaryModification of Final Judgment
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A landmarkanti-trustsettlement
Leads to break up ofThe Bell System
By 1984, seven RBOCs arise
Picture: Flickr/Hiddenpower
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Then, AT&T’s incumbencywas deemedharmful AT&T’s
vertically integrated
organizationhad
stifled competition
(notably in long-distance communications and telecom equipment)
Picture: Flickr/Jenkinslawlibrary
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Now, anti-trustfocuses elsewhere
“Accumulating data about you
isn't just a strange hobby
for these corporations.
It's their whole business model.
And you are not their client. You are their product.”
U.S. Senator Al FrankenSpeech to the American Bar Association
March 29, 2012
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While telcos decidewhat’s core
O&M
R&D
Access
Streamliningactivities Over
the Top
Brands
Spectrum
Cloud
M2M
Billing
Payments
Analytics
Verticals
Wholesale
Picture: Flickr/roger.karlsson
Customers
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Non-telcosare collectingdigital assets
World leader
digital search
(in 1982)World leader
telecom equipment
World’s largest
private company
Picture: Flickr/dsearls
Let’s compare ‘incumbents’ past – and present
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1982
Bell Labs(now Alcatel-Lucent)
Inventions includeUNIX, C++
World’s 5th largestsoftware company;owns AT&T spinoff
Telcordia
Ericsson Labs and acquisitions
via Motorola Mobilityalone
20,000 30,000 24,500
Examples: Google search, Android, BigQuery, Chrome,
Google+, GoogleApps,Google Talk
Western Electricequipment division
World’s largestmobile network equipment
vendor
World’s 4th largest server manufacturer
Innovationarsenals
Owned
asset
Related
asset
No
asset
Patents
Softwareand services
Hardware
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Spectrum
Technicolor Broadcast servicesdivision
O3b satellite system (launching 2013)
Metro Wi-Fi networks in U.S. and Nairobi, Kenya
Fiber
Wi-Fi
Satellite
Metro, long-distance, sub-sea fiber assets
Builds, operatesfiber networks
World’s 1st commssatellite, Telstar 1
Bought Wi-Fi vendor BelAir
U.S white space
spectrum database
administrators(approval pending)
Networkinfrastructure
Owned
asset
Related
asset
No
asset
Developedoptical laser
1982
Satellite backhaulservices
Builds, operatesmobile networks
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Devices
Google Wallet
AdWords, AdSense
Content
Advertising
Payment
Examples : YouTube, Google TV, Google Earth, Google Play, StreetView
Content distributionservices with Akamai
Admarket platform
Consumptionenablers
Owned
asset
Related
asset
No
asset
IPX multimedia brokering & Ericsson
Wallet payment system
Western Electric, American Bell
LG-Ericsson, ST-Ericsson, M2MDevice Connection
Platform
Motorola Mobility
$
1982
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Less is nowmore
$1,167,339$156,538* $278,210
Employees
Revenueper employee
*adjusted for inflation
1,040,000
32,467104,525
1982
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1982*
$131billion
$162.8billion
$27.5billion
$30.2billion
$192billion
$37.9billion
10% 9.8% 18.8%
Who’s most successful?
*adjusted for inflation
Revenue
Market cap
ROIC
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World populationtouched
1 billion900 millionsubscribers via managed networks unique visitors per month
(also 4 million enterprises on GoogleApps)
108 million
* in 1982
14.3%12.8%
2.6%*
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In 1982, AT&Twon a sweetenerto break up The Personal Computer
‘Man’ of Year for 1982
A move into computers*
A new age of Personal Communicationwas dawning
* It failed.
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Now, personalcommunicationis the anti-trustissue
European Union
United States
Argentina
UK
South Korea
India
Search, advertising
Online advertising
Search, StreetView
Wi-Fi ‘slurping’
Search, advertising
Search,Android
StreetViewWi-Fi ‘slurping’
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Vertical integrationisn’t evil
What matters is how
it’s managed
Picture: Flickr/Leo Reynolds
The world’s most valuable
companyhas a
controlledecosystem
It’s also fighting an anti-trust lawsuitalleging price fixing
of e-books
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The digital economyis expanding
New privacy
challenges
As machines join the ‘conversation’
in a post-PC world
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Differenttastesare evident
Bonappétit!
Network
infrastructure
Digital
content
Personal
devices
Telcos becomemore virtual
Internet firms become
more physical
Picture: Flickr/free range jace
Device makersoffer virtual goods
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Can regulatorskeep up?
Today’s anti-trust
challenges
1. Need for velocity33 years to settle the AT&T-DoJ suit; 11 years for Microsoft-EU suit
2. Wider scopeDiversity of virtual assets (eg: new gTLDs)
3. Defining abuseUnaligned policies (eg: EU vs US)
4. Who to protectConsumers and/or competitive firms
2012 will be as important for anti-trust as 1982
Picture: Flickr/dgray_xplane
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Marketobservations
• Value creationConcentrated in social, mobile & virtual assets
• Value enablersPhysical assets remain critical
• Regulatory bias?Virtual asset focus for Internet firmsPhysical asset focus for telcos & hardware firms
• Stakeholder rolesBlurring in a multi channel, multi platform world
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Contact
Camille Mendler
Principal Analyst, Informa Telecoms & Media
+44 7766 13 15 28
Twitter: @cmendler